Many people want to “protect” Social security by destroying it (i.e. privatizing it).
If Medicare or Social Security is privatized (that is, given to the criminals on Wall Street) then Wall Street will double or triple your FICA taxes, and cut your benefits by two thirds. It’s all about maximizing profits.
(I suspect that Hillary has made a deal with Wall Street. If they give her the White House, she will give them Medicare and Social Security. I’m serious. I would vote for Trump before I voted for her.)
Other people are more sincere in wanting to protect Social Security, but they threaten it by not understanding economics.
The Big Lie is that money is physical and limited, such that the U.S. government cannot create infinite dollars out of thin air. If you mention any part of the Big Lie – no matter how well intentioned you are – then you contribute to inequality. An example would be mentioning the mythical “Social Security Trust Fund.”
Because of this, I would not be surprised to learn that the biggest pushers for privatizing Medicare and Social Security give money to groups that want to save these programs, but who doom the programs because they do not understand the truth.
Some of these people simply don’t care. They just like being paid,,.
An example of the guy above is Gerald Friedman, who is an economics professor at the University of Massachusetts Amherst. Below we see Friedman “helping” an elderly woman.
Gerald Friedman claims to have done a study of what would happen to the U.S. economy if Bernie Sanders becomes president. His claims have been reprinted by CNN.
Friedman claims that with Bernie Sanders as president…
- Median income would soar by more than $22,000, becoming $82,200 by 2026.
- Nearly 26 million jobs would be created.
- The unemployment rate would fall to 3.8%.
- Poverty would plummet to a record low 6%
- The U.S. economy would grow by 5.3% per year, instead of 2.1%.
- Sanders’ plan will juice GDP and productivity by pouring $14.5 trillion into the economy — including spending on infrastructure and youth employment, increasing Social Security benefits, making college free, and expanding health care and family leave.
Great. So what’s the problem?
Friedman also claims that with Sanders the federal deficit would turn into a large surplus by Sanders’ second term.
(I added that nod to Monty Python. Remember that gag?)
Sanders’ policy director calls Friedman’s study “outstanding work.” (So much for Stephanie Kelton’s influence on Sanders.)
The Big Lie says the U.S. government cannot “print” dollars out of thin air, and that, therefore, the U.S. government must worry about having enough money to pay its bills. Therefore the U.S. government cannot “afford” to have a deficit, and must instead have a surplus — i.e. the government must destroy more dollars than it creates.
Not only does this totally invalidate all of Friedman’s claims, it opens the fortress gates back up to ever-worsening inequality.
“Like the New Deal of the 1930s, Senator Sanders’ program is designed to do more than merely increase economic activity,” Friedman writes. It will “promote a more just prosperity, broadly-based with a narrowing of economy inequality.”
No. In defending any part of the Big Lie, you ruin everything.
Many presidential hopefuls say their economic programs would boost growth. Donald Trump and Jeb Bush justify their big tax cuts by saying GDP would grow at a 4% rate. But their plans have been panned by experts as overly optimistic.
Friedman, however, argues that Sanders’ plan would be more stimulative because it is pouring money into the economy, as opposed to cutting taxes. Several of Sanders’ proposals — such as spending $1 trillion on infrastructure — will happen in the first few years of his administration.
No, what stimulates the (real) economy is a large federal deficit, whether it is created by spending increases, or tax cuts, or both. A large federal deficit means more dollars in circulation. Simply spending money into the economy will not help if the government raises taxes higher than ever.
Stimulating demand can boost a weak economy during a recession, but “it’s harder to accept as a long-run growth strategy,” said William Gale, the former director of Brookings’ Economic Studies Program.
That’s the right-wing response. Total garbage. “Stimulating the economy might be good for right now, but we don’t want to keep stimulating the economy in the future.”
For entities that cannot create dollars out of thin air, we use red to denote deficit numbers. In the graph above, I reversed this. The red numbers signify federal budget surpluses, which meant deficits for the economy — which always mean recessions. Not until 2002 did the economy get back into “the black” when Bush started spending for his wars.
A deficit for the federal government means a surplus for the economy. A surplus for the federal government means a deficit for the economy. Is this really so hard to understand?